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Alleged Oral Contract Was Not Governed by CDA Requirements

The government's motion to dismiss a breach of contract claim for lack of jurisdiction was denied by the Court of Federal Claims because the alleged oral contract was not a "procurement" and the claim therefore was not subject to the Contract Disputes Act's requirement to exhaust administrative remedies. The claimant, a real estate broker, was a subcontractor to a prime engaged by the Department of Housing and Urban Development to manage, market, and oversee the sale of HUD-owned single family homes. During the contract term, the government asked the claimant to participate in a confidential quality management review program designed to measure the effectiveness of the prime contractor's performance in implementing HUD's Property Disposition Program. Before agreeing to participate, the claimant received specific oral assurances from the government's agents that all feedback would be kept strictly confidential. Apparently, the feedback was not all positive and within hours after the feedback session ended, the prime notified the claimant by e-mail that its subcontract was being unilaterally terminated. The claimant filed a complaint against the government, asserting the breach of an implied-in-fact contract.
Not a Procurement

The government moved to dismiss, arguing the court lacked jurisdiction because the claimant failed to submit its claim to the HUD contracting officer before filing its complaint, as required by the CDA. However, the alleged contract was not a procurement within the meaning of the CDA (41 USC 602(a)) and therefore did not trigger the CDA's jurisdictional prerequisite that a claim be filed with the CO. It was clear the government had no obligation to pay --with or without appropriated funds --for the "services" provided by the claimant. Case law supported this conclusion as "courts have refused to stretch the language of the CDA to cover contracts that do not arise from a typical 'acquisitive' relationship and the expenditure of appropriated funds or some other exchange of recognized value." Moreover, the government protested the claimant's failure to file a claim with the CO, but HUD never appointed a CO to the matter. As stated by the court, it most likely "never occurred to the agency that it needed to conduct a "procurement of services" in order to approach one of its subcontractors for a few hours of feedback." The court, therefore, could invoke its Tucker Act jurisdiction. (Lublin Corp. t/a Century 21, Advantage Gold v. U.S., FedCl, 53 CCF 79,037)


(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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